Consumers borrowed more for 7th straight month

WASHINGTON (AP) -- Americans borrowed more money in April for the seventh straight month, but they cut back on using their credit cards.

Consumer borrowing rose by nearly $7.2 billion, fueled by greater demand for school and auto loans, the Federal Reserve said Tuesday. A category that measures credit card use fell for the second time in three months. It has risen only twice since August 2008, the height of the financial crisis.

The 3.1 percent overall increase pushed consumer borrowing to a seasonally adjusted annual level of $2.43 trillion, just above the nearly four-year low of $2.39 trillion hit in September.

The report includes auto loans, student loans and credit cards, but excludes mortgages and loans tied to real estate. The Fed will give a more complete picture of Americans' debt on Thursday when it issues its quarterly report on household net worth.

Households began borrowing less and saving more to cope with the recession, which ended in June 2009. Credit card use has plummeted nearly 19 percent over the past 20 months and it has dropped 5 percent over the past year.

Overall borrowing has increased in recent months. But analysts say the reason for that is also a reflection of the weak economy: the gains have been driven by more people borrowing money to attend school -- many of whom are out of work.

High unemployment, steep gas prices and a weakening housing market have also forced people to resist reaching for their plastic.

"When you take out student loans, you're still seeing credit card use, and borrowing overall, falling," said Paul Dales, chief U.S. economist at Capital Economics. "That's a sign about how people view the economy."

Most economists say borrowing will increase this year. But they don't expect consumers to increase their debt in the way they did during the housing boom.

During that time, Americans felt wealthier because of soaring home values. When home prices fell, they cut back on borrowing. And they slashed further after job losses mounted and many people struggled to get their debt under control.

Stocks fall again as Bernanke offers no stimulus

NEW YORK (AP) -- Stock indexes closed lower Tuesday, giving up earlier gains, after Federal Reserve Chairman Ben Bernanke said the economic recovery remains uneven. Bernanke offered no new steps to stimulate growth.

The Dow Jones industrial average had been up as many as 89 points but turned lower in the late afternoon as Bernanke's speech started. The Dow's loss of 19 was the fifth straight decline for the index, the longest string of losses since August.

Bernanke said the U.S. economy had not grown as quickly as had been expected so far this year. He said growth has been held back by disruptions of industrial supplies from Japan following the tsunami and nuclear disaster there and higher gas prices.

Bernanke expects the economy to pick up in the second half of the year, but he acknowledged that the pace of the growth remains "frustratingly slow from the perspective of millions of unemployed and underemployed workers."

Some investors had been hoping Bernanke would announce additional measures to support the economy. Major indexes fell after it became clear that Bernanke was not wavering from his view that the U.S. economy is growing gradually and does not need more stimulus. The Fed's $600 billion bond-buying program, which is aimed at keeping interest rates low, is ending at the end of June.

"People are getting skittish," said Brian Wenzinger, a portfolio manager at Aronson Johnson Ortiz in Philadelphia. "Housing is getting worse, and they're rethinking a possible double-dip recession." But, Wenzinger added, the relatively small drop in the stock market was a positive sign following several days of steep losses.

The Dow Jones industrial average lost 19.15 points, or 0.2 percent, to close at 12,070.81. The Standard and Poor's 500 dipped 1.23, or 0.1 percent, to 1,284.94. The Nasdaq composite shed 1, or less than 0.1 percent, to 2,701.56.

Stocks have swooned since late April because of concerns that the U.S. economy is stalling from a combination of high gas prices, weaker than expected hiring and a slowdown in manufacturing. The Dow has fallen nearly 500 points over the last five days. The S&P remained below the psychologically important level of 1,300 for the second straight day and closed at its lowest level in two and a half months.

The Labor Department reported that businesses had fewer job openings in April. The government said that employers posted 3 million ads for jobs in April, down from 3.1 million in March. The figure added to the stack of other signs that the U.S. is having an employment crisis. However, the report did little to change the direction of stocks.

In corporate news, a contentious acquisition proposal ratcheted up the stock price of all companies involved. International Paper Co. rose 0.4 percent after smaller rival Temple-Inland fought back against International Paper's hostile takeover bid for $3.3 billion in cash. Temple-Inland soared 40 percent on the news. Weyerhaeuser Co. rose 5 percent, the most of any company in the S&P 500, on suspicion it was another takeover candidate for International Paper.

Cablevision Systems Corp. rose 4.5 percent after the New York-area cable company set a date when it would spin off its cable networks. The company plans to divest popular television networks including AMC, which broadcasts the popular "Mad Men" show on June 16. Investors prefer the sleeker broadcast networks like WE TV, IFC and the Sundance Channel operating on their own to the current unwieldy corporate structure.

Rising shares narrowly outnumbered falling ones on the New York Stock Exchange. Volume was 3.6 billion shares.

Food prices slightly lower

ROME (AP) -- Global food prices fell slightly in May, but they will remain "at stubbornly high levels" for months to come, a U.N. agency said Tuesday.

The Food and Agriculture Organization said high and volatile prices can be expected the rest of this year and into 2012, citing a decline in food stockpiles and modest production increases for most of the crops.

Food prices dropped 1 percent in May compared to the previous month, but remain 37 percent above May 2010, according to a price index released by the agency. It said lower cereal and sugar prices led to the decrease in the May index, offsetting increases in meat and dairy prices.

The index hit an all-time high in February, raising fears of a repeat of the food crisis of 2007-2008, when high prices led to violence and political tensions in many parts of the world. Prices in March decreased, though experts warn they remain far too high for many poor communities.

"We have seen month after month of high and volatile food prices and the end is nowhere in sight," said Luca Chinotti, a policy adviser with aid agency Oxfam.

In its Food Outlook report, the FAO says the next few months will be crucial in determining how the major crops fare this year.

Prospects in major wheat producers Russia and Ukraine are encouraging, the report said, but maize and wheat yields in regions of Europe and North America are in danger because of poor weather.

Northern Europe has been battling a drought that is worrying farmers and threatening to hurt harvests. There are also reports of drought in the southern United States, while too much rain is affecting planting in the northern plains.

"The general situation for agricultural crops and food commodities is tight, with world prices at stubbornly high levels, posing a threat to many low-income food deficit countries," said David Hallam, director of the FAO's trade and market division.

The 2011 cereals harvest is projected to hit a record high and register a 3.5 percent increase from last year, FAO said. Starting in July, Russia will lift a ban on grain exports that had been imposed after a severe drought -- a move that might help meet increasing demand.